Financial Peace - February Update

In my last post I laid out the foundation for a Total Money Makeover (TMM). Kevin and I are working hard to achieve full on Financial Freedom! We are so excited with how much has changed since we began this process. Here's what we've accomplished so far:



7 Baby Steps:
Baby Step #1 - $1,000 to start an Emergency Fund (Feb 2011)
Baby Step #2 - Pay off all debt using the Debt Snowball
Baby Step #3 - 3 to 6 months of expenses in savings
Baby Step #4 - Invest 15% of household income into Roth IRAs and pre-tax retirement
Baby Step #5 - College funding for children
Baby Step #6 - Pay off home early
Baby Step #7 - Build wealth and give!


Baby Step #1
We scraped everything we could to get this step accomplished. Your goal is to get this completed ASAP so you can move on to the Debt Snowball and start gaining the Gazelle Intensity...trust me, you'll catch on ;) ...I am not exaggerating one tiny bit when I say we started at ground zero. On January 18th, 2011 we had $0.55 in savings. I repeat, $0.55...Here's how we got our $1,000.


$277 - My Bday money received from generous family!
$60 - Returned two shirts to Dillard's that I bought for New Year's and never wore
$173 - Expense report check I received from work
$75 - Sold my textbook for the class I just finished, Fraud Auditing
$261 - Items sold on eBay (a digital camera, unopened NutriSystem food, some collectible figurines I had, and some of Kevin's sports cards)
$53 - Leftover money from my tax return
$123 - "Extra" money from our paychecks that I under-budgeted for
$227 - Debt Snowball 


I know this equals more than $1,000 (give me a little credit here), it actually equals $1,250. Kevin booked me a photography session with Amanda Marie Portraits for my birthday and we decided to save extra to cover that expense instead of giving it up.


When we started Baby Step #1, we thought there was no way this would happen soon, maybe 2-3 months, but people LISTEN UP! Completing this step took us only 1 month (38 days to be exact). YOU can do this too!!


Baby Step #2


Pay off all debt (except the house). Ha! Not even possible. Well, I was wrong. This step is probably the hardest, and it's longer term (Dave Ramsey says the average household should complete this step in 18-20 months). Basically, you list your debts in order from smallest to largest...SMALLEST to LARGEST and you pay only the minimum payments on each so you have the rest to "Snowball" to your smallest balance. You will see results along the way which will help keep you motivated.


OUR DEBT


Name of Card (Beginning Balance) (Current Balance)
Victoria's Secret CC: ($103) PAID OFF in February 2011
New York & Co CC: ($205) --- ($190)
Capital One CC: ($466) --- ($444)
Chase CC: ($1,314) --- ($1,301)
Wells Fargo CC: ($1,469) --- ($1,475)
JCPenney CC: ($2,523) --- ($2,499)
Granny: ($3,620) --- ($3,470)
1st Financial CC: ($9,697) --- ($9,710)
Kevin's Truck: ($7,196) --- ($7,033)
Tia's Car: ($14,200) --- ($13,894)
Tia's Student Loan #1: ($1,341) --- ($1,307)
Kevin's Student Loan #1: ($1,448) --- ($1,448)
Kevin's Student Loan #2: ($12,274) --- ($12,274)
Tia's Student Loan #2: ($17,060) --- ($16,911)


TOTAL DEBT:  ($72,916) --- ($71,956) = Total Paid Off: $960


**We decided to order ours from smallest to largest in 3 categories: Credit Cards, Vehicles, then Student Loans. The ONLY reason we've done this is because our goal is to be in a position to build a house next fall and we need to be credit card debt free first and foremost.


So to recap, in only 1 1/2 months we have saved $1,250 AND paid off almost $1,000 of our debt AND we still have money somehow :) I will be keeping you guys updated monthly and I hope to hear your success stories as well!


THIS WORKS, AND YOU CAN DO IT TOO!! Are you up for the challenge??